Government
To Fix Municipal Finances, States Need to Back Off
Many cities are powerless when it comes to controlling the money in their coffers. Here's how to fix that.
Elizabeth Fretwell was sworn in as city manager of Las Vegas in January 2009. In what can only be described as a bout of very bad timing, at that moment, Las Vegas was on the front edge of a precipitous fall-off in city revenues.
As consumer spending dropped in response to the onset of the crisis, first to drop were revenues from a state-administered tax that includes levies on sales of liquor, cigarettes and other goods, as well as real estate transfers. Before long, city revenues from the property tax followed suit as real estate values in the city began to plummet. In the downtown area alone, the assessed value of land and buildings dropped by $1 billion from its peak between 2008 and 2010.